Considering the purchase of large stamping machine

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Reference no: EM131589985

A company is considering the purchase of a large stamping machine that will cost $130,000, plus $6,900 transportation and $12,600 installation charges. It is estimated that, at the end of five years, the market value of the machine will be $54,000. The IRS has established that this machine will fall under a three-year MACRS class life category. The justifications for the machine include $37,000 savings per year in labor and $47,000 savings per year in reduced materials. The before-tax MARR is 20% per year, and the effective income tax rate is 40%. What is the after-tax equivalent annual worth of this investment over the five year period which ends with the sale of the machine? (Do not enter a dollar sign $ with your answer.)

Reference no: EM131589985

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